158,000 jobs added in June, sur­vey says; ser­vices sec­tor grows

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Christo­pher S. Rugaber and Josh Boak of The As­so­ci­ated Press and by Pa­tri­cia Laya of Bloomberg News.

WASH­ING­TON — U.S. busi­nesses added a mod­est 158,000 jobs in June, a sur­vey found — a sign that hir­ing has de­cel­er­ated but re­mains healthy enough to lower the un­em­ploy­ment rate over time.

Pay­roll pro­ces­sor ADP said Thurs­day that the strong­est job gains were in ser­vices, such as ed­u­ca­tion, health care, ho­tels and restau­rants. Man­u­fac­tur­ers added 6,000 jobs, but con­struc­tion firms and min­ing com­pa­nies, which in­clude oil and gas drillers, cut 6,000.

The re­port echoes other fig­ures that show hir­ing has slowed over the spring, with job gains av­er­ag­ing just 121,000 from March through May, ac­cord­ing to govern­ment data. Most econ­o­mists chalk it up to a dwin­dling sup­ply of work­ers as the un­em­ploy­ment rate falls.

An­a­lysts pre­dict that the govern­ment’s jobs re­port, to be re­leased to­day, will show 179,000 jobs were added last month, ac­cord­ing to data provider Fac­tSet.

The ADP sur­vey cov­ers only pri­vate busi­nesses and of­ten di­verges from govern­ment fig­ures.

Job gains have av­er­aged 162,000 through the first five months of this year, ac­cord­ing to the La­bor Depart­ment, a solid to­tal that has pulled the un­em­ploy­ment rate down from 4.7 per­cent in De­cem­ber to 4.3 per­cent in May, the low­est in 16 years.

That has left many busi­nesses strug­gling to find the people they need to fill open jobs. There are more than 6 mil­lion open po­si­tions, a record level, ac­cord­ing to a separate re­port from the La­bor Depart­ment.

Mark Zandi, chief econ­o­mist at Moody’s An­a­lyt­ics, which helps com­pile the ADP re­port, said that a short­age of work­ers will likely worsen as the baby boom gen­er­a­tion con­tin­ues to re­tire. More than 10,000 Amer­i­cans turn 65 ev­ery day.

“This is go­ing to be the big­gest prob­lem busi­nesses will face in the fore­see­able fu­ture,” Zandi said. An in­crease in im­mi­gra­tion would help ac­cel­er­ate

the growth of the work force, he added. “At this pace [of job growth] the tight la­bor mar­ket will con­tinue get­ting tighter.”

Busi­nesses are also not, on av­er­age, of­fer­ing higher pay to en­tice more ap­pli­cants. Av­er­age hourly pay rose just 2.5 per­cent in May from a year ear­lier, below his­tor­i­cal trends of about 3.5 per­cent in a healthy econ­omy.

U.S. ser­vice com­pa­nies ex­panded at a faster pace last month, pushed up by slightly bet­ter sales and a pickup in new or­ders.

The In­sti­tute for Sup­ply Man­age­ment, a trade group of pur­chas­ing man­agers, said Thurs­day that its ser­vices in­dex rose to 57.4 in June, from 56.9 in May. Any reading above 50 in­di­cates ex­pan­sion. The re­port cov­ers roughly 90 per­cent

of the econ­omy, from re­tail and ho­tels to ac­count­ing, govern­ment and con­struc­tion.

The econ­omy ap­pears to be pick­ing up a bit of steam after a slug­gish first quar­ter, when growth was just 1.4 per­cent at an an­nual rate. Amer­i­cans have stepped up their spend­ing, and com­pa­nies are re­stock­ing their shelves and ware­houses with new goods. A gauge of in­ven­to­ries jumped 3.5 points to 57.5 last month, the trade group’s re­port said.

Econ­o­mists fore­cast the econ­omy grew at roughly a 2.5 per­cent pace in the April-June quar­ter.

An In­sti­tute for Sup­ply Man­age­ment sur­vey re­leased Mon­day re­ported that fac­tory ac­tiv­ity ex­panded in June at the fastest pace in nearly three years.

The group’s non­man­u­fac­tur­ing

sur­vey re­leased Thurs­day “showed fur­ther strength­en­ing from an al­ready-ro­bust level” in the ser­vices sec­tor, Stephen Stan­ley, chief econ­o­mist at Amherst Pier­pont Se­cu­ri­ties, said in a note to clients.

Slightly more Amer­i­cans ap­plied for un­em­ploy­ment ben­e­fits last week.

Weekly ap­pli­ca­tions rose by 4,000 to a sea­son­ally ad­justed 248,000, the La­bor Depart­ment said Thurs­day. The less volatile four-week av­er­age rose 750 to 243,000.

The num­ber of people col­lect­ing un­em­ploy­ment ben­e­fits has fallen 7.9 per­cent over the past 12 months to 1.96 mil­lion.

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